It should be noted that Texas history is filled with citizens from other states and countries moving to Texas to escape debt and not so friendly debt collection laws, including in some instances, debtor’s prison. For example, William B. Travis avoided arrest in Alabama for unpaid debts by moving to Texas.

As a result, the early Texans were not so fond of government interference in their private matters, including debt-collection. That legacy still exists in Texas today. Obtaining a judgment against a citizen of Texas may be one thing. But collecting it is certainly another.

Chapters 41 and 42 of the Texas Property Code set forth certain property classifications which are “exempt” from execution by a judgment creditor. Execution is the process of forcefully taking the property of a debtor, selling it, and paying the proceeds to a judgment creditor. If the property is exempt, it may not be taken to satisfy a judgment debt.

Chapter 41 of the Texas Property Code deals with exempt real property. Real property includes any permanent improvements and fixtures located on land. Except for certain permitted types of liens and removables, a “homestead” and one or more lots used for a place of burial are exempt from seizure for the claims of a judgment creditor.

In order to qualify as a homestead, the real property (and improvements) must be categorized as either “urban” or “rural”. If a property is “urban”, then the homestead exemption is limited to 10 acres. If a property is “rural”, then for a single adult person the homestead exemption is limited to 100 acres, and for a family the exemption is limited to 200 acres.

A property is considered “rural” if it is not “urban”. A property is considered “urban” if the property is located within the limits of a municipality or the extraterritorial jurisdiction of a municipality or a platted subdivision; and is served by policy protection, paid or volunteer fire protection, and at least 3 of the following services provided by a municipality or under contract to a municipality: (a) electric, (b) natural gas, (c) sewer, (d) storm sewer, and (e) water.

The proceeds from the sale of a homestead continue to be exempt for a period of 6 months following the date of sale.

Chapter 42 of the Texas Property Code addresses exempt personal property. Personal property includes moveable property which is not real property. Certain amounts and types of personal property are exempt from garnishment, attachment, execution, or other seizure. The amount is limited to $100,000.00 of the combined fair market value of the personal property of a family. For a single adult, the exemption amount is limited to $50,000.00.

The following are types of personal property that are exempt so long as the combined value does not exceed the limitations set forth above:

home furnishings, including family heirlooms;

provisions for consumption;

farming or ranching vehicles and implements;

tools, equipment, books, and apparatus, including boats and motor vehicles used in a trade or profession;

wearing apparel;

jewelry not exceeding 25% of the aggregate limits set forth above;

two firearms;

athletic and sporting equipment, including bicycles;

a two-wheeled, three-wheeled, or four-wheeled motor vehicle for each member of a family or single adult who holds a driver’s license or who does not hold a driver’s license but who relies on another person to operate the vehicle for the benefit of the nonlicensed person;

the following animals and forage on hand for their consumption:
1. horses, mules, or donkeys and a saddle, blanket, and bridle for each;
2. 12 head of cattle;
3. 60 head of other types of livestock; and
4. 120 fowl; and

k. household pets.

Unpaid commission for personal services not exceeding 25% of the limitations set forth above are also exempt from seizure.

The following are the types of personal property that are exempt and their combined value is not included in the limitations discussed above:

current wages for personal services (except for court-ordered child support payments);

professionally prescribed health aids of a debtor or a dependent of a debtor.

alimony, support, or separate maintenance received or to be received by the debtor for the support of the debtor or a dependent of a debtor; and

bible or other religious book containing sacred writings (excludes a landlord exercising a contractual or statutory right to seize property after a tenant’s breach of a lease or abandonment of the leased premises).

Additionally, certain savings and retirement plans and college savings plans are also exempted from seizure.

In 1987, Texas passed the Alternative Dispute Resolution Act which is now found in Chapter 154 of the Texas Civil Practices and Remedies Code. This Act introduced formal mediation to the State of Texas. Since that date, mediation has been used to resolve countless disputes between citizens, businesses, and governmental subdivisions of the State of Texas.

What is mediation? Mediation is a forum and process in which an impartial person, called the mediator, encourages and assists parties to a dispute to reach a settlement or resolution of that dispute between themselves. The mediation may be ordered by the court or through voluntarily participation by the parties to the dispute. Where the parties have retained attorneys to assist with the dispute, the attorneys participate in the mediation with their respective clients.

The mediation process in Texas is strictly confidential. Unless the parties agree, the statements of the parties, their conduct, demeanor, and their legal and factual positions may not be disclosed to anyone by the mediator. This rule encourages the parties to be entirely forthcoming with the mediator during the course of the mediation.

The mediator is not there to impose a decision on the parties. Even if the mediator is a licensed attorney, the mediator should not provide the parties with any legal advice or make ultimate judgments on the potential outcome of the dispute if it were to go to trial or arbitration.

Mediations are usually held in private and without any public fanfare. Most court cases are public record, and typically hearings or trials will be open to the public. Mediation allows the parties to settle their disputes quietly.

Mediation allows the parties, instead of a judge, jury or arbitrator, to reach a resolution of their dispute on terms that are acceptable to them. Note the term, “acceptable”, as many mediations actually result in outcomes in which one or more of the parties reach settlement terms that are not necessarily a “win”, or what they would want if the case had to be litigated. Mediation involves the parties negotiating to reach an acceptable outcome rather than fighting one another in an expensive and time-consuming forum to potentially achieve a win-lose or sometimes lose-lose outcome.

The mediator tries to use specific methods and techniques to assist the parties in reaching a settlement. For example in resolving a business dispute, it may seem necessary for one partner to end up with the business while the other ends up with the monetary value of his interest in the partnership. Looking at the dispute in that fashion is an example of an evaluative method of resolving disputes. “Horse-trading” is another example of an evaluative method of resolving disputes, and focuses on reaching an outcome in the most direct manner. Much of the time this technique works well to resolve simple disputes where the sum of the whole is equal to its parts, and those parts must be divided up to settle the case.

However, if the mediator delves deeper into the backgrounds of the parties, the origin of the disputes, and the motivations of each party to become involved in the dispute, many times it becomes clear that the mediator has more to deal with than simply dividing up ownership and money. A facilitative method can be best described as an attempt to find a resolution which has mutual benefits for all parties. Under the facilitative method the mediator looks for subtle undertones of the dispute. Those subtleties usually require the mediator to delve into areas that on the surface may not seem to have any direct relevance to the dispute.

In our example, the mediator may find out that one of the partners is a really good business person, while the other may be really good with the manufacturing of the good or the generation of the service which makes up the business. The mediator may find out that the two partners were once best friends, who but for the dispute (which may or may not have anything to do with the business), no longer can operate all parts of the business together. Under the facilitative approach, the mediator will attempt to repair the relationship, and try to find a resolution which may allow the parties to stop fighting each other and go back to work in their respective areas of strength for the benefit of the business and themselves as its owners.

Clearly, these are extremely simple examples. But a good mediator will always look at several methods and techniques of dispute resolution in order to determine which methods or combinations will achieve a positive result.

Since its inception, mediation has been a positive process for litigants in Texas. It has helped reduce the case load of our courts and saved millions of dollars for the participants involved. Just about any type of dispute can be mediated. From disputes between countries, NFL quarterbacks and commissioners, divorces, collection suits, and just about any other type of disagreement, mediation can be a tool to save money, time, and public scrutiny.

Scott Alagood is board certified by the Texas Board of Legal Specialization in Commercial and Residential Real Estate Law. Scott may be reached at alagood@dentonlaw.com or www.dentonlaw.com.

One of the most frequent questions asked of attorneys goes something like this.

Q: X and I verbally entered into an agreement concerning [insert subject matter here}. X didn’t perform his part of the agreement. Can I sue him over that agreement?

Verbal agreements may be enforceable where they contain all of the legal elements necessary to form a contract. That is, there is an offer made by one party, an acceptable of the offer by another party, consideration exists, and the agreement is not otherwise illegal or against public policy. Consideration may be in the form of goods or money, or may be nothing more than mutual promises of each party to perform in accordance with the agreement. Certain contracts which have been held to be illegal or against public policy in Texas are gambling debts, Mary Carter Agreements, and unreasonable non-compete agreements.

In situations where it appears that an otherwise enforceable contract exists, the law will not enforce a verbal contract or promise unless it is in writing and signed by the person sought to be charged (or his or her authorized agent). This legal rule is called the Statute of Frauds and is codified in Section 26.01 of the Texas Business & Commerce Code.

The Statute of Frauds applies to the following types of promises and agreements:

–promises from an executor or administrator to pay the debts or damages of the decedent;

–guaranty agreements;

–an agreement made in consideration of marriage or non marital conjugal cohabitation;

–a contract for the sale of real estate;

–a lease of real estate for a term longer than one year;

–an agreement that is not to be performed within one year;

–an agreement to pay a commission on the sale or purchase of an oil or gas lease, royalty, or mineral interest; and

–an agreement, promise, or warranty of cure relating to medical care or results by a physician or health care provider (excluding pharmacists).

There are other types of agreements which must be in writing and signed by the party to be bound, such as:

Where a contract appears to meet the terms of the Statute of Frauds, the writing must contain within itself or by express reference to another writing all of the essential or material terms of the parties’ agreement. The contract terms must be ascertained from the writing without resort to outside verbal testimony or writings not referenced in the contract. Certain terms of a contract may be implied by a court if not specifically addressed, such as the time for performance, time and place of payment, and in certain situations, price.

In a contract involving the sale or lease of real estate which is subject to the statute of frauds, the writing must contain itself, or by reference to another existing writing, sufficient data or other means by w which the land may be identified with reasonable certainty. Failure of the contract to contain a proper legal description in these situations will render the contract unenforceable under the Statute of Frauds.

Of course, there are always exceptions. Where on of the parties to an agreement partially performs the agreement, a court will not apply the Statute of Frauds. “Partial performance” occurs when one party to the agreement performs his part of the agreement and in reliance suffers a substantial detriment for which there is no legal remedy, while the other party would reap an unearned benefit. For example, Seller agrees to sell his house to Buyer for a specified price, but the agreement is never reduced to writing and no deed to the property is ever delivered to the Buyer. In reliance of such verbal agreement, the Buyer takes possession of the house, pays the agreed price, maintains and improves the residence, pays the property taxes, insures the dwelling, and otherwise does all the things that an owner would do. If the Seller than refuses to deed the property to the Buyer following the Buyer’s performance, the law will not render the verbal agreement unenforceable under the Statute of Frauds.

Scott Alagood is Board Certified in Commercial and Residential Real Estate Law by the Texas Board of Legal Specialization and can be reached at alagood@dentonlaw.com or www.dentonlaw.com.